The EU will hit more Russian officials with travel bans and asset freezes by the end of the week.
European foreign ministers made the decision at a meeting in Brussels.
EU ambassadors will draw up the list of those to be sanctioned on Thursday.
German Foreign Minister Frank-Walter Steinmeier said: “We will substantially increase the pressure on those who do not cooperate to overcome the current crisis – and many around the table expressed the opinion that in particular Russia has not done enough to seriously defuse the conflict in eastern Ukraine.”
Ministers also asked the European Commission to prepare possible sanctions in key economic areas by Thursday.
They include access to capital markets, defence, and sensitive technologies including energy.
Dutch Foreign Minister Frans Timmermans said: “The Council has decided today to make the possibility of further sanctions concrete – that will happen by the compilation of a list of names, which will take us only a couple of days. and, further on, we will start very explicitly to work on the so called ‘third phase sanctions’.
But as Euronews correspondent James Franey reports, it is only EU leaders who can decide on whether to fully implement those economic sanctions.